EUR/USD and $1.0950 in the Hands of Lagarde and the US Jobs Report

Highlights

• The EUR/USD had an uneventful morning, rising by 0.02% to $1.08896.
• German industrial production and central bank chatter will draw interest today.
• However, the US Jobs Report will be the focal point after the ADP report on Thursday.

It is a busy day ahead for the EUR/USD. German industrial production numbers for May will draw interest early in the European session. In June, Germany’s manufacturing PMI fell from 43.2 to 40.6, raising the threat of a more extended recession.

A larger-than-expected fall in production would test support for the EUR/USD. Economists forecast industrial production to fall by 0.1% in May.

With the German economy in the spotlight, investors should monitor ECB chatter throughout the day. ECB Executive Board Member Luis de Guindos and ECB President Christine Lagarde are on the calendar to speak today.

Away from the economic calendar, US-China trade news will also need consideration.

The US Session

It is a big day on the US economic calendar. The all-important US Jobs will be the focal point. A surge in nonfarm payrolls and hotter-than-expected wage growth would support a more hawkish post-summer Fed monetary policy outlook.

US economic indicators from Thursday fueled bets on a July rate hike but had a limited impact on sentiment toward a September move. The US Jobs Report needs to align with the ADP Report and signal a pickup in wage growth to change the September narrative.

According to the CME FedWatch Tool, the probability of a 25-basis point July Fed rate hike stood at 91.1% versus 90.5% on Wednesday. Significantly, the chances of the Fed lifting rates to 5.75% in September stood at 26.4%, up from 18.1% on Wednesday.

EUR/USD Price Action

This morning, the EUR/USD was up 0.02% to $1.08896.

Daily Chart

The Daily Chart showed the EUR/USD remained below the $1.09 psychological resistance level and the lower level of the $1.09385 – $1.09525 resistance band. Looking at the EMAs, the EUR/USD sat above the 50-day ($1.08592) and 200-day ($1.07259) EMAs, signaling bullish momentum over the near and longer term.

Notably, the 50-day EMA pulled away from the 200-day EMA and reflected bullish momentum.

Looking at the 14-Daily RSI, the 51.99 reading signaled a moderately bullish trend, aligned with the 50-day EMA. A hold above the 50-day EMA ($1.08592) would support a run at the lower level of the $1.09385 – $1.09525 resistance band.

4-Hourly Chart

Looking at the 4-Hourly Chart, the EUR/USD faces strong resistance at the $1.09 psychological level.

After the Thursday rally, the EUR/USD sits above 200-day EMA ($1.08669) but below the 50-day ($1.08899), sending mixed signals.

Significantly, the 50-day EMA narrowed to the 200-day EMA, signaling a run at the 200-day EMA ($1.08669) and the upper level of the $1.08465 – $1.08345 support band.

The EUR/USD must move through the 50-day EMA ($1.08899) to give the bulls a run at the lower level of the 1.09385 – $1.09525 resistance band. However, a fall through the 200-day EMA ($1.08669) would bring the upper level of the $1.08465 – $1.08345 support range into view.

The 14-4H RSI reading of 52.31 indicates a moderately bullish stance, supporting a breakout from the 50-day EMA and a run at the lower level of the $1.09385 – $1.09525 resistance band.